Automotive giant Motus has reported a R1.9bn decline in new vehicle sales revenue for the six months to end-December 2024, highlighting the financial pressures forcing consumers to opt for second-hand vehicles.
The group’s total revenue dropped by 2% to R56.2bn, with operating profit falling 4% to R2.54bn. CEO Ockert Janse van Rensburg acknowledged the difficult conditions, pointing to a combination of “margin pressure, strong competition and reduced demand” across both SA and international markets such as the UK and Australia.
In response to the results statement the company’s share price fell us much as 14% to R96.89.
Motus’ SA retail division was particularly hard hit, as more consumers traded down to cheaper used cars in response to affordability constraints.
“[This was a result of] the buying-down trend, intense competition, reduced consumer disposable income as well as the shift in vehicle sales between new and pre-owned vehicles as a result of customer affordability,” Motus said.
"The decrease in revenue was mainly as a result of reduced contributions from new vehicle sales of R1.93bn (7%). This was offset mainly by increased contributions from pre-owned vehicle sales of R629m (5%) and parts and other goods sales of R224m (2%)," it said.
Despite the tough conditions, Motus reported an increase in cash flows from operating activities to R186m, up from the R230m cash outflow recorded in the previous period. The group also cut its net finance costs 10% by focusing on reducing inventory and debt.
While Motus struggles with the new vehicle slump, the pre-owned car market is booming, with second-hand vehicle specialist WeBuyCars emerging a winner. Since its April listing last year on the JSE, WeBuyCars’ share price has soared more than 120%, making it one of the best-performing stocks on the exchange, according to Financial Mail.
The group reported a 16.5% increase in full-year revenue and a 23.4% jump in core headline earnings to R815.4m, driven by its direct-to-consumer model, competitive pricing and efficient vehicle turnover.
WeBuyCars has also capitalised on the rise of affordable Chinese vehicle brands, which made up 9.1% of its total sales in 2024. Unlike traditional dealerships that rely on financing options, WeBuyCars benefits from a high proportion of cash buyers, many of whom are looking for cheaper alternatives in the thick of rising living costs and high interest rates.
The Automotive Business Council (Naamsa) previously warned that new vehicle sales have not recovered to 2019 levels, and economic pressures are likely to keep demand subdued for at least another year.
“Since the first half of 2024 was particularly challenging, new vehicle sales in 2024 fell compared to 2023, even though the last quarter of 2024 was promising. Consequently, the new vehicle market hasn’t been able to recover to the 2019 pre-pandemic level in four years and is likely to be delayed for another year,” Naamsa said.
Despite this, Motus remains optimistic about its long-term prospects. The group reported a 3% increase in headline earnings per share (HEPS) to 681c per share and declared interim dividends of 240c per share.
“Positive momentum and shifting consumer preferences across our businesses have created opportunities in line with our strategies positioning us favourably for growth,” Janse van Rensburg said.
“Motus remains cash generative with sufficient funding facilities, providing a strong foundation to explore opportunities for de-gearing and optimising our financial position.”
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